Products and Prices synchronization between Dynamics CRM/365 and ERP

When Dynamics 365 is used as a Sales force platform, there is often a need to identify the products that customers are buying in order to determine information such as sales price, support eligibility or other more business and industry specific information. Dynamics 365/CRM offers a set of entities and processes to manage the sales cycles. However, in most cases, the sales have to be recorded in a Finance system, often referred to as ERP (Enterprise Resource Planning) software. This article talks about what Dynamics 365/CRM has to offer on the sales process, product and price management side, what the limitations are then it comes to integrating with an an ERP and discusses some possible solutions.

Managing Sales Process and Pricing in Dynamics 365/CRM

Dynamics 365/CRM comes with a pre-defined sales process that can take you from a lead to a sales order and an invoice. It’s up to each organization to decide what entities they want to use in the process and configure it to meet their needs. The image below shows the sales cycles as defines by Out of the Box Dynamics 365 for Sales.


During the sales process, there is a level of interaction with products and prices at almost every step.

  • In the Opportunity, you enter the list of products and prices that your prospect is interested in.
  • In the quotes, you can copy the products selected in the related opportunity and update them, change the prices, rework the quote until it is accepted by the customer
  • The Order uses the products and prices defined in the accepted quote and the Invoice has the same information as the order

Prior to being made available for selection, the products and prices have to be defined and published in the system. The principle (at a very high level) is illustrated in the image below:



I’m purposely not going over details related to the Price List setup (e.g. volume discounts setup) or Opportunity (write-in products, percentage or amount based manual discount etc.). There is much more to it but I just want to give the big picture here. To sell products in CRM, you must have pre-defined Price List per currency. If you sell in a lot of regions, have a lot of different bundles with lots of product types and variances, then you might end up with a system that is loaded with products and price lists. There is no issue with this model as long as there is an established process to manage those products and price lists in your CRM system.

What are the challenges when ERP comes into play?

There are a few challenges that we see in the field as it relates to the process and structure above.

The out of the box sales process ends with the creation of a sales order and an invoice in Dynamics CRM/365. The reality is that a lot of businesses have these steps in an ERP or have to synchronize what CRM produces to a Finance system. This can be complex because the details about the products selected in the Quote/Order/Invoice have to have matching elements in the ERP system (usually SKU). This means that your product and pricing information has to be synchronized between your CRM and your ERP. This is often a challenge.

ERPs typically have more advanced ways to manage products and prices. They are not as rigid as the price-list based Dynamics 365/CRM structure. As an example, you can have product masters that serve as models for variants (e.g. product is a t-shirt, variants can be size, color, drawing etc.) and prices are automatically calculated based on the selected variables, the region and various other configurable parameters. These mechanisms present in ERP systems are in many cases more adopted for complex products and pricing structures because they allow for more flexibility and result with a model that is easier to maintain. The direct consequence for synchronizing product and price lists with Dynamics CRM/365 is that the data structure of the ERP either has to be converted into a price-list based model, or CRM has to be customized to match the ERP system’s product and pricing structure. Here are a few suggestions and guidelines when you are faced with this type of decision:

  1. If the ERP data model is not too far from the CRM model, you can simply make adjustments as required in CRM and synchronize the data between the 2 systems as needed.
  2. If the ERP data model is complex (e.g. uses product variants), ask yourself the following questions
    • Is it even possible to adapt the CRM data model to match the complex ERP structure?
    • What is the effort (data modeling, data transformation) to keep the CRM and ERP products and prices in sync? (Some ERP systems have ways to automatically generate a price-list based data structure for extraction)
    • Considering that the data model and sync issues are resolved, does the structure and volume of the data (number of products and price lists and data model) allow for a good user experience on the CRM sales side? (i.e. can users still easily find their products and price lists in CRM while working with opportunities or orders etc.). – you might have to create a custom user interface to provide your users with a better experience in order to drive adoption.
  3. Consider using a Configure Price Quote (CPQ) solution as an add-on to Dynamics CRM/365. Some of them are extremely well designed and provide the ability to configure complex product pricing structures while taking care of the user interface to build quotes (add products and automatically calculate prices etc.) and being integrated with Dynamics 365 for Sales/CRM and some ERP products.

A question is often asked: if ERPs are more flexible for pricing, why not have your sales people directly working in ERP? And the answer is simple for Dynamics 365. First, the cost, it is generally much cheaper to buy a Dynamics 365 for Sales app license than to buy an ERP license. Second, Dynamics 365/CRM is much more configurable to adapt to the business processes (creating fields, forms, views, relationships, integrated reports, sales suggestions etc.). I could go further but I won’t. Don’t have your sales people working out of your ERP, it’s generally a bad idea.

Conclusion

    Product management in Dynamics CRM/365 is a relatively rigid process. When you have a complex scenario where the products and pricing info comes from another system, it is important to carefully analyse the gap with the Dynamics 365 structure and to decide how you want to close that gap.

Happy CRM’ing!